Market Update

Today’s Market Update

Yield Curve Continues to Steepen with Optimistic Outlook for 2021
2021-02-22

This morning equity markets ticked lower and Treasury yields continued to edge higher with the 10-year Treasury yield above 1.3%.  Last week had mixed economic data, with the labor market continuing to grow below expectations but several other metrics showing surprisingly positive results.  The positive surprise in the data and the consistent message from the Fed on their accommodative policy stance is boosting optimism about the pace of the current recovery.  The Treasury curve has continued to steepen as the positive data has come in and we will look to Fed Chair Powell’s next comments on whether the Fed is concerned about the current pace of the rise in longer-term rates.  To achieve the best outcome for 2021 economic growth it is critical that the new administration continue effectively distributing the COVID-19 vaccine and quickly pass new fiscal stimulus.  This remains particularly important as the US continues efforts to stop the spread of COVID-19, although over the past month there has been a significant fall in the daily number of new cases and hospitalizations.  To date, the US has recorded over 28.1 million coronavirus cases and more than 499,000 deaths according to data from John Hopkins.

-CMS Staff

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